Category: Macroeconomic Theory

The United States Census is rich with information that can be used by economist to understand demographic and social trends. A popular way of presenting data from the U.S. Census data by plotting it on a map. The goal of this...

The following links contain the dataset and the STATA program used to generate the econometric estimates found in this post. Data: Election Outcomes and Economic Peformance (1996) STATA Program: Election Outcomes and Economic...

A few months ago I created an ARIMA forecast for 2010’s 4th quarter and 2011’s first quarter GDP numbers. My forecast proved to be very accurate in predicting the growth of the economy for the last 6 months. ...

Variance decomposition refers to the breakdown of the forecast error variance for a specific time horizon. Variance decomposition can indicate which variables have short-term and long-term impacts on another variable of...

This post will develop a simple rational expectations model for the level of output and price in the economy. Although, the mathematics might not seem simple, in a later post expectations about multi-period price levels will...

This posts develops a model of the macroeconomy in matrix algebra form. The model consist of markets for goods, money, and labor in addition to a general economic production function. In accordance with the adaptive...

The debate as to whether fluctuations in money help predict future fluctuations in in income has stood at the heart of the Monetarist and Keynesian debates as eloquently described by Friedman and Kuttner in their influential...

In a previous post the impulse response functions for the German macroeconomic variables where estimated and graphically depicted using STATA. The dialogue focused on the interpretation of the impulse response graphs. While...

An impulse response function describes who shocks to a system of equations affects those equations over time. In economics one might be interested in understanding how a sudden and unexpected change in one variable impact...

In a previous post the dynamics of U.S. macroeconomic variables were estimated using a Vector Autoregression. In that standard VAR estimation every equation can be estimated as a stand alone regression, but there some...